The external MDA custodian must maintain at all times professional indemnity insurance and insurance covering fraud by its officers and employees that:
(a) is adequate having regard to the nature of the activities carried out by the external MDA custodian in relation to MDA services; and
(b) covers claims at the same time amounting in aggregate to the lesser of:
(i) $5 million; or
(ii) the aggregated average value of the client portfolio assets of all people to whom it provided custodial or depository services as retail clients for a MDA service during a 12 months period ending no more than one month previously or, if it has not been providing custodial or depository services for a MDA service for 13 months, the amount that it reasonably estimates will be the aggregated average value of the client portfolio assets of all persons to whom it will provide custodial or depository services as retail clients during the first 12 months for which it provides those services for a MDA service.
912AG Interpretation
(1) In this section and in sections 912AE to 912AFE, a document is given to a person only when:
(a) it is received in accessible form by that person or their agent (eligible agent), being an agent who is not one of the following:
(i) a licensee who provides or is to provide a MDA to the person; or
(ii) an external MDA custodian who provides custodial or depository services for the person; or
(iii) an external MDA adviser, who provides financial product advice to the person; or
(iv) an associate of a person in subparagraph (i) to (iii); or
(b) if there is no way of sending the document that may reasonably be expected to result in it being received by the person or their eligible agent—when all reasonable steps are taken to send it to the person or their eligible agent; or
(c) one business day after an email is sent to the email address of the person or their eligible agent that the sender reasonably believes is the address of the person or eligible agent where the person has agreed to receive the document by email; or
(d) one business day after an email is sent containing a link to or the electronic address of the document to the email address of the person or their eligible agent that the sender reasonably believes is the address of the person or eligible agent where:
(i) the person has agreed to receive documents in that manner; and
(ii) the document can be downloaded free of charge (excluding any normal fees payable to the recipient’s internet service provider); or
(e) when it would be delivered in the ordinary course of post, if it is posted as a letter prepaid from the sender to an address of the person or their eligible agent that the sender reasonably believes is the address of the person or eligible agent; or
(f) a copy of the document is given in accordance with any of paragraphs (a) to (e) and the giver takes reasonable steps to ensure that the document received by the person is complete and unaltered.
(2) For the purposes of subsection (1):
(a) an email is sent when the email would be taken to be dispatched under section 14 of the Electronic Transactions Act 1999 if it applied to that subsection; and
(b) a document is taken to be a copy of another document regardless of:
(i) immaterial differences in the sequence in which information is presented; and
(ii) prompts and links if they are not likely to:
(A) cause a reasonable person to confuse the contents of the document with another document; or
(B) reduce the likelihood of a reasonable person reading any part of the document; and
(iii) the absence from, or simplification in, the document of graphics of a promotional or decorative nature; and
(iv) the inclusion in the document of codes or features to control the display of the document which do not otherwise alter the sense or content of the document.
(3) In this section and in sections 912AE to 912AFE:
(a) a person (first person) engages another person if the first person engages or authorises the other person; and
(b) a person (first person) indirectly engages another person (second person) if:
(i) the first person engages a person and that person engages the second person; or
(ii) a person who is indirectly engaged by the first person under subparagraph (i) or this subparagraph engages the second person.
(4) In this section and in sections 912AE to 912AFE:
annual investor statement:
(a) in relation to an IDPS, has the same meaning as in subsection 912AD(42) (as notionally inserted by ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669); and
(b) in relation to an IDPS-like scheme, has the same meaning as in subsection 1013DAB(19) (as notionally inserted by ASIC Corporations (Investor Directed Portfolio Services Provided Through a Registered Managed Investment Scheme) Instrument 2023/668).
client has the same meaning as in section 4 of the MDA Legislative Instrument.
client contributions has the same meaning as in section 4 of the MDA Legislative Instrument.
client portfolio assets has the same meaning as in section 4 of the MDA Legislative Instrument.
custodial staff means natural persons who under an arrangement with the licensee or a custodian have duties relating to holding client portfolio assets, record keeping relating to those assets, checking authorisations for instructions to transact or functions incidental to these functions other than making investment decisions, trading decisions or other discretionary decisions resulting in the transfer or disposal of client portfolio assets other than discretionary decisions in relation to holding a deposit account with a corporation that is regulated for the taking of deposits where the balance of the deposit account is payable on demand and discretionary decisions relating to transactions in foreign currency.
custodian a person engaged by a MDA provider to hold client portfolio assets or a beneficial interest in those assets.
external MDA adviser has the same meaning as in section 4 of the MDA Legislative Instrument.
external MDA custodian has the same meaning as in section 4 of the MDA Legislative Instrument.
IDPS has the same meaning as in ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669.
IDPS-like scheme has the same meaning as in ASIC Corporations (Investor Directed Portfolio Services Provided Through a Registered Managed Investment Scheme) Instrument 2023/668.
investment program, when used in a provision outside of section 912AEB, has the same meaning as in subsection 912AEB(4).
investment strategy means the investment objective and other matters that guide the investment decision making of the licensee in relation to dealing in and holding client portfolio assets under a MDA.
MDA contract has the same meaning as in section 4 of the MDA Legislative Instrument.
MDA Legislative Instrument means the ASIC Corporations (Managed Discretionary Account Services) Instrument 2016/968.
MDA provider has the same meaning as in section 4 of the MDA Legislative Instrument.
MDA service has the same meaning as in section 4 of the MDA Legislative Instrument.
non-limited recourse product has the same meaning as in section 4 of the MDA Legislative Instrument.
quarter’s end means, in relation to electronic access to information under paragraph 912AEF(2)(b):
(a) the end of the day that is a quarter day; or
(b) where such access is not given at the time mentioned in paragraph (a)—the time at which access is first given after that time.
quarterly report:
(a) in relation to an IDPS, has the same meaning as in subsection 912AD(42) (as notionally inserted by ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669); and
(b) in relation to an IDPS-like scheme, has the same meaning as in subsection 1013DAB(19) (as notionally inserted by ASIC Corporations (Investor Directed Portfolio Services Provided Through a Registered Managed Investment Scheme) Instrument 2023/668).
regulated platform means an IDPS, IDPS-like scheme or a superannuation entity within the meaning of the Superannuation Industry (Supervision) Act 1993.
regulated platform operator means, in relation to a regulated platform:
(a) in the case of an IDPS, an operator (as defined in ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669) of the IDPS; and
(b) in the case of an IDPS-like scheme, the responsible entity of the IDPS-like scheme; and
(c) in the case of a superannuation entity, the trustee of the superannuation entity.
sub-custodian a person that a custodian directly or indirectly engages to hold client portfolio assets or a beneficial interest in those assets.
transaction reports means, in relation to a transaction effected through:
(a) an IDPS—quarterly reports and annual investor statements for the IDPS; and
(b) an IDPS-like scheme—quarterly reports and annual investor statements for the IDPS-like scheme; and
(c) a superannuation entity—periodic statements given by the trustee of the superannuation entity under section 1017D.”.